Question & Answer

What information is conveyed by the TTT curve?

How are the tax issues associated with home offices and vacation homes used as rentals similar? How are the tax issues or requirements dissimilar?

What are some of the important reasons why manufactured parts must be cleaned?

Machinery purchased for $60,000 by Tom Brady Co. in 2010 was originally estimated to have a life of 8 years with a salvage value of $4,000 at the end of that time. Depreciation has been entered for 5 years on this basis. In 2015, it is determined that the total estimated life should be 10 years with a salvage value of $4,500 at the end of that time. Assume straight-line depreciation. Instructions (a) Prepare the entry to correct the prior years’ depreciation, if necessary. (b) Prepare the entry to record depreciation for 2015.

Benjamin recently bought a truck in Alabama for his business in Georgia.  What different types of federal and state taxes may affect this transaction?

Identify the most common types of coating processes.

What is the difference between a basic process and a secondary process?

Explain the relative risk of the various types of securities in which a money market fund may invest. (LO3)

What is the most commonly plated substrate metal?

What are some of the functions of the ingredients that are added to glass in addition to silica? Name at least three.

Amy is evaluating the cash flow consequences of organizing her business entity SHO as an LLC (taxed as a sole proprietorship), an S corporation, or a C corporation. Amy used the following assumptions to make her calculations: a)      For all entity types, the business reports $22,000 of business income before deducting compensation paid to Amy and payroll taxes SHO pays on Amy’s behalf. b)      All entities would use the cash method of accounting. c)      If Amy organizes SHO as an S corporation or a C corporation, SHO will pay Amy a $5,000 annual salary (assume the salary is reasonable for purposes of this problem). For both the S and C corporations, Amy will pay 7.65% FICA tax on her salary and SHO will also pay 7.65% FICA tax on Amy’s salary (the FICA tax paid by the entity is deductible by the entity). d)     Amy’s marginal ordinary income tax rate is 35 percent and her income tax rate on qualified dividends and net capital gains is 15 percent. e)      Amy’s marginal self-employment tax rate 15.3 percent. f)       Amy pays a .9 percent additional Medicare tax on salary and net earnings from self-employment (i.e., her salary and net earnings from self-employment income are over the threshold for the tax). g)      Amy pays a 3.8 percent net investment income tax on dividends and net capital gains (i.e., AGI on joint tax return is over threshold by more than any net investment income she receives). h)      Assume that for purposes of the qualified business income deduction, the business income is not from a specified service and neither the wage-based limitation nor the taxable income limitation applies to limit the deduction. i)        If SHO is formed as an S corporation or a C corporation, SHO will distribute all of its earnings after paying entity level taxes and after deducting salary and related FICA taxes paid to Amy.   Required:   a. Fill in the cells in the table below to identify cash flows associated with the income from the business if the business is formed as an LLC (sole proprietorship), S corporation, or C corporation for tax purposes. Enter cash outflows as negative numbers.     Cash flow LLC (Sole prop) S corporation C corporation Business income $22,000 $22,000 $22,000 FICA taxes paid by Amy       FICA taxes paid by SHO       Self-employment tax paid by Amy       Federal income tax paid by SHO       Additional Medicare tax paid by Amy       Net investment income tax paid by Amy       Federal income tax paid by Amy*       Cash remaining after-taxes       *Remember to consider account flow-through income, qualified dividends, the self-employment tax deduction, and the qualified business income deduction in thecalculation.                   b. At a high level, describe the factors causing differences in the after-tax cash flows from each entity, given that the before-tax cash flows are the same (don’t use dollar amounts in explanation).

reported the following information regarding 2013–2014 inventory.     Instructions (a) Why might Robots, Inc., use two different methods for valuing inventory? (b) Comment on why Robots, Inc., might disclose how its LIFO inventories would be valued under FIFO. (c) Why does the LIFO liquidation reduce operating costs? (d) Comment on whether Robots, Inc. would report more or less income if it had been on a FIFO basis for all its inventory.

The Fed uses a targeted federal funds rate when implementing monetary policy. However, the Fed’s main purpose in its monetary policy is typically to have an impact on the aggregate demand for products and services. Reconcile the Fed's targeted federal funds rate with its goal of having an impact on the overall economy. (LO2; LO3)

One of the mandrel types in electroforming is a solid mandrel. How is the part removed from a solid mandrel?

Does the kiddie tax eliminate the tax benefits gained by a family when parents transfer income-producing assets to children?  Explain.

What is a blind hole?

How does electroless plating differ from electrochemical plating?

Assuming adequate E&P, will the shareholder’s tax basis in noncash property received equal the amount the shareholder includes in gross income as a dividend (assuming adequate E&P)? Under what circumstances will the amounts be different, if any?

Compare and contrast the aggregate and entity approaches for a sale of a partnership interest.

Kaymer Corporation issued 300 shares of $10 par value ordinary shares for $4,500. Prepare Kaymer’s journal entry.

Consider a period in which stock prices are very high, such that investors begin to think that stocks are overvalued and their valuations are very uncertain. If investors decide to move their money into much safer investments, how do you think this would affect general interest rate levels? In your answer, use the loanable funds framework to explain how the supply or demand for loanable funds would be affected by the investor actions, and how this would affect general interest rate. (LO1)

Identify a major technical problem in tube bending?

Jack and Jill are owners of UpAHill, an S corporation. They own 25 and 75 percent, respectively.  a. What amount of ordinary income and separately stated items are allocated to them for years 1 and 2 based on the information above?  Assume that UpAHill Corporation has $100,000 of qualified property (unadjusted basis) in both years.

How does anodizing differ from other conversion coatings?

Briefly describe some of the similarities and differences between GAAP and IFRS with respect to income tax accounting.